# How much money will you have if you started with $1200 and put it in an account that earned 7.3% every year for 10 years?

##### 2 Answers

You would have

#### Explanation:

First determine how much interest was earned over ten years. Then add the interest to the principal.

To determine interest earned over

where

Convert

Determine the amount of interest earned over

Add the interest to the principal.

It depends on whether we're using simple interest or compound interest. Using simple interest, we will have $2076 after 10 years. With compound interest, we'll have $2427.61.

#### Explanation:

If the bank is using simple interest, then the answer is

#A = P+I#

#color(white)A=P + Prt#

#color(white)A=P(1 + rt)#

#color(white)A=$1200[1 + 0.073(10)]#

#color(white)A=$1200[1 + 0.73]#

#color(white)A=$1200[1.73]#

#color(white)A=$2076#

If the bank is using *compound* interest, then the answer is

#A=P(1+r/n)^(nt)#

where

#A=$1200(1+0.073/1)^(1 times 10)#

#color(white)A=$1200(1.073)^10#

#color(white)A~~$1200(2.0230062)#

#color(white)A=$2427.61#